Home (Time Value)

 Business 

  » »
 
   

Time Value

Business  Time to maturity  Time value of money

Time Value of Money
Imagine that a carton of Oregon Strawberry costs $10, and you invest $5 in a company that makes the produce. The investment yields and you capitalize this amount in a year.


time value of money
The recognition that a dollar in the present is more valuable than a dollar in the future. Present-value calculators and present-value tables assist in converting future dollars to the present value in order to make a prudent decision.

time value
Because an option grants the holder a right, it has value for the holder. It represents a liability for the issuer. Option valuation is any procedure for assigning a market value to an option.

Time Value
The value of an option that captures the chance of further appreciation before expiration.

In essence, time value of money refers to the growth of 1 dollar as time increases. 1 dollar today is worth more 10 years down the road because it can earn interest payments. How much is 1$ worth 10 years down the road?

Time value of an option
Definition: [crh] The portion of an option's premium that is based on the amount of time remaining until the expiration date of the Definition: ion+contract"option contract, ...

Time value is, as above, the difference between option value and intrinsic value, i.e.
Time Value = Option Value - Intrinsic Value.

Time Value of Money is a fundamental concept in which money today is worth more than the same amount of money tomorrow. In other words, being given a $100 bill today is not the same as being given a $100 bill tomorrow, because you can deposit or invest that $100 today.

Time Value of an Option
Time Value of an Option It is the part of the option's premium, which is based on the time remaining till expiry of the option's contract. During this time, the option's value may change depending on the movement of its underlying components.

Time Value Of Money: Because money invested in a security or deposited in a savings account will earn income over time, there is a value placed on the use of money for any given period. This value is represented, for example, by the rate of interest paid on a savings account.

Time Value - The part of the option premium derived from the volatility and the time remaining until expiration. It is the part of the option premium that is NOT the intrinsic value.

time value
The portion of an option's value imputed to the possibility that the price of the underlying will move in the option holder's favor during the time remaining before the option expires.
times interest earned ...

Time value of money
The time value of money is the rate at which the value of money is traded off as a function of time. Because money can be invested to earn a return, economic values of the same dollar amount received at different times are not equivalent.
Timekeeping ...

Time value of money
The idea that a dollar today is worth more than a dollar in the future, because the dollar in the hand today can earn INTEREST during the time until the future dollar is received.
Tobin, James ...

Time value of money - This relates to the concept that one $ a person has today is worth more than a $ that a person has tomorrow. It is based on the idea that a dollar can earn interest by putting it into a savings account or placing it in an alternative investment.

Time value of money
The potential of an investment to increase in value through periodically compounded earnings.
Tip
An amount paid for a service beyond what’s required, usually to express satisfaction; also known as a gratuity.

Time Value or Extrinsic Value The amount that the current market price of a right, warrant or option exceeds its intrinsic value. Intrinsic value is the amount by which the market price of a security exceeds the price at which the warrant, right or option may be exercised.

time value: The portion of an option premium that is attributed to the amount of time remaining until the option contract expires. Time value is whatever value the option has in addition to its intrinsic value.

Time Value vs. Intrinsic Value
by OI Staff
In the world of options Intrinsic value and time value are parts that make up every option contract that you will buy or sell. To get a better understanding of them both, one needs to have a firm definition as to what they each mean.

Time value of money
The time value of money is money's potential to grow in value over time. Because of this potential, money that's available in the present is considered more valuable than the same amount in the future.

Time value of money
Investments generate cash flow to the investor to compensate the investor for the time value of money.

Time value of an option
The portion of an option's premium that is based on the amount of time remaining until the expiration date of the option contract, and that the underlying components that determine the value of the option may change during that time.

Time value of money (TVM). In addition to keeping pace with inflation, the investor or lender has a natural inclination for consumption sooner rather than later. The cost of compensating for this aspect of human nature has been found to be about 1 to 2 percent per year.

Time Value
The amount of an option premium that exceeds the intrinsic value of an in-the-money option. A call option with a strike price of 30, for example, has a premium of 3. If the underlying stock is at 32, the call has an intrinsic value of 2, and the time value is 1.

Time Value - Has two general meanings. The first is the value or amount of a sum of money adjusted by an interest rate for a given time period. The second common usage is in the context of options.

Time value
Applies to derivative products. Portion of an option price that is in excess of the intrinsic value, due to the amount of volatility in the stock; sometime referred to as premium. Time value is positively related to the length of time remaining till expiration?
Time value of an option ...

Time Value
A phrase used in relation to options. Time value is any portion of the option premium over an above the intrinsic value.

The time value of money
Risk aversion
The risk free rate of return, risk premia and yield spread
Diversification
NPV and DCF valuation
Dividend yield and flat yield.
Internal rate of return and yield to maturity
Compound growth
Valuation ...

Also called time value, the amount by which the option price exceeds its intrinsic value.
Personal Finance Headlines
SEARCH: ...

Also known as time value. Extrinsic value is the price of an option minus its intrinsic value. As out of the money options have no intrinsic value, their option premium is based entirely on extrinsic value.
Fair Value or Theoretical Value ...

Compounding the time value of money for separate time intervals.
[ Previous Page ]
Personal Finance Glossary ...

Time Value
The concept that money now is worth more than money in the future, because money now can earn a return by being lent out. In valuing compani...(Read more)
Timely Execution ...

A measure of the time value of money that fully reflects the effects of compounding.
Effective spread
The gross underwriting spread adjusted for the impact of the announcement of the common
stock offering on the firm's share price.

A measure of the time value of money that fully reflects the effects of compounding.
Expensed
Charged to an expense account, fully reducing reported profit of that year, as is appropriate for expenditures for items with useful lives under one year.

Understanding The Time Value Of Money
What Is A Small Cap Stock?
Time Value Of Money: Determining Your Future Worth
What Mutual Fund Market Cap Suits Your Style?

including time value of money considerations.
Claimant A party to an explicit or implicit contract.
Clean opinion An auditor's opinion reflecting an unqualified acceptance of a company's financial statements.
Clean price Bond price excluding accrued interest.

PayablesRelated: Accounts payable PaybackThe length of time it takes to recover the initial cost of a project, without regard to the time value of money.

Claim dilution A reduction in the likelihood one or more of the firm's claimants will be fully repaid, including time value of money considerations. Claimant A party to an explicit or implicit contract.

Payback The length of time it takes to recover the initial cost of a project, without regard to the time value of money. Paydown In a Treasury refunding, the amount by which the par value of the securities maturing exceeds that of those sold. Used in the context of general equities.

What Is Customer Lifetime Value?
What Are International Consulting Firms?
What Is Total Factor Productivity?
What Is the Importance of Customer Satisfaction?
What Are the Advantages of a Planned Economy?
What Is a Recruitment Policy?
What Are the Different Types of Business Ethics Violations?

TIME VALUE OF MONEY The effect that time and compound interest has on money. TIMING RISK A form of investment risk that the investor may buy or sell an investment at the wrong time.

The present value of a future payment, or the time value of money, is what money is worth now in relation to what you think it'll be worth in the future based on expected earnings. For example, if you have a 10% return, $1,000 is the present value of the $1,100 you expect to have a year from now.

Option trading strategies: Can be market directional, volatility directional, market neutral, volatility neutral, time value capture, time value payment, and numerous variants of the aforementioned. The basic building blocks are puts and calls.

It ignores the time value of money;
It is inflexible with respect to evaluating fluctuating income amounts during the project. Cash Payback Method ...

Prior to the option's expiration date, an at-the-money option also has time value. The time value of an at-the-money option is influenced chiefly by the amount of time remaining until the expiration date.

Discounted payback is a way of calculating the payback period while taking into account the 'time value' of money.

DISCRETE COMPOUNDING - Compounding the time value of money for separate time intervals.
DISCRETE RANDOM VARIABLE - A random variable that can take only a certain specified set of individual p...
DISCRETE VARIABLE - Variable like 1, 2, 3. Bond ratings are examples of discrete classifications.

Wasting Asset
1: Securities with a value that expires at a specified time in the future. The time values of the securities deteriorate as their termination date approaches. Examples of wasting assets are option contracts, warrants and rights.
See: Options; Right; Time Value; Warrant ...

Importantly though, the buyer or the writer may independently terminate their outstanding positions before the expiration date, by executing offsetting transactions. The value of an option comprises a time value and an INTRINSIC VALUE, the latter resulting from the price of the underlying stock.

Present value accounts for the time value of money. The question is:
What is the value of several payments to be received over some future period, in terms of today's dollars?

Effective annual interest rate
An annual measure of the time value of money that fully reflects the effects of compounding.
Effective annual yield
Annualized interest rate on a security computed using compound interest techniques.

It reflects the amount of time value premium in the option for various stock prices, as well. The curve is generated by using a mathematical model. The delta (or hedge ratio) is the slope of a tangent line to the curve at a fixed stock price. See also Delta and Hedge Ratio
Source ...

The APR is adjusted for the time value of money, so that dollars paid by the borrower up-front carry a heavier weight than dollars paid in the future.

(music) a slur over two notes of the same pitch; indicates that the note is to be sustained for their combined time value ...

Discrete Compounding definition :
Compounding the time value of money for separate time intervals.
TSCTrade.com
Your personal broking service FTSE 350 and Smallcap Share Service ...

TIME VALVE
Part of the option premium which reflects the excess over the
intrinsic value, or the entire premium if there is no intrinsic value.
At given price levels the option's time value will decline until
expiration. It is this decrease in time value that makes options a
wasting asset.

It is important to recognize the lifetime value of a client or customer instead of focusing only on a one-shot, money-making deal.

In life insurance, a method of comparing costs of similar policies by using an index that takes into account the time value of money due at different times through interest adjustments to the annual premiums, dividends and cash value increases at an assumed interest rate.

Convergence
The movement of the price of a futures contract toward the price of the underlying cash commodity. At the start, the contract price is usually higher because of time value. But as the contract nears expiration, and time value decreases, the futures price and the cash price converge.

Discount rate: A finance term that represents a measure of the time value of money.

Downstream division: The buying division in a transfer pricing scenario.

NPV properly discounts the cash flows while other methods may ignore the Time Value of Money concepts. It is important to understand that the cash flows you are factoring in are not accounting profits which factor in depreciation.

A technique for project appraisal, based on the length of time it takes to recover the initial cost required to undertake a project, without regard to the time value (i.e. opportunity cost) of the money.
Français: Méthode de remboursement
Español: Método de reembolso, método de amortización ...

A measure of the interest cost of an issue that accounts for the time value of money.

Discounted cash flow. A method of evaluating an investment by estimating future cash flows and taking into consideration the time value of money.

Present Value: Representation of the current value of a future payment or serial payments at scheduled compounding periods with a specific discounting rate of return. Financial advisors may use the phrase "time value of money" while accountants might prefer "discounted cash flows."
...

But talk to your CPA or financial advisor about the expected cash flows of your proposed investment and ask them to run a quick analysis on it for you. It's important to consider the time value of money and they can show you how this works without too much problem.

Extrinsic Value
The price of an option less its intrinsic value. The entire premium of an out-of-the-money option consists of extrinsic value. It is therefore the option's time value.

More precisely, it means that stock prices change so that after an adjustment to reflect dividends, the time value of money, and differential risk, they equal the market's best forecast of the future price.

for using information and IT in marketing, with the ultimate goal of TEM is to allocate marketing resources to the activities, channels, and media with the best potential return and impact on profitable customer relationships. The new metrics of customer profitability, customer lifetime value and ...

See also: See also: Time value of money, Index, Transaction, Banks, Values

Business  Time to maturity  Time value of money

 
RSS Mobile